M/S. BARNALA STEEL INDUSTRIES LTD.,MUZAFFARNAGAR vs. ACIT, MUZAFFARNAGAR

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ITA 6781/DEL/2013Status: DisposedITAT Delhi05 September 2016AY 2002-032 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that mere disallowance of expenses or depreciation does not automatically warrant a penalty for concealment of income. There was no allegation of concealment of facts or furnishing of incorrect details by the assessee.

What were the facts?

The assessee appealed against the levy of penalty under Section 271(1)(c) for three assessment years. The penalties were levied on account of disallowance of expenses, partial depreciation, and scholarship payments.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied solely on the basis of disallowance of expenses or depreciation without any evidence of concealment of income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL

Before: SHRI G.D. AGRAWALG.D. AGRAWAL & AND BEFORE SHRI G.D. AGRAWALG.D. AGRAWAL & AND SMT. DIVA SINGH SMT. DIVA SINGHSMT. DIVA SINGH SMT. DIVA SINGH

For Appellant: Shri Ankit Gupta, Advocate
For Respondent: Shri Umesh Chandra Dubey
Hearing: 30.08.2016Pronounced: 05.09.2016

PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP These appeals by the assessee for the assessment years 2002- 03, 2004-05 & 2007-08 are directed against the order of learned CIT(A), Muzaffarnagar dated 23rd September, 2013.

2.

In all these appeals, the assessee is aggrieved against the levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961 as under:-

Assessment Year Amount 2002-03 `22,383/- 2004-05 `16,794/- 2007-08 `33,661/-

3.

We have heard the submissions of both the sides and have perused the material placed before us. We find that penalty u/s ITA-6781, 6782 & 6784/D/2013 2 271(1)(c) of the Act has been levied on the disallowance of small amounts. In assessment year 2002-03, penalty has been levied for disallowance of expenses of `62,697/- on the only ground that the expenditure was not actually paid. In assessment year 2004-05, the Assessing Officer disallowed part of depreciation amounting to `46,805/-. In assessment year 2007-08, penalty has been levied on account of disallowance of scholarship of `1,00,000/- paid by the assessee. In our opinion, merely because some expenditure is disallowed or depreciation is partly allowed, it cannot be a ground of levy of penalty for concealment of income. There is no allegation that the assessee concealed any fact or the details furnished by the assessee were found to be incorrect, erroneous or false. In view of the above, we, respectfully following the decision of Hon’ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. – (2010) 322 ITR 158 (SC), cancel the penalties for all the three years under consideration.

4.

In the result, all the appeals of the assessee are allowed. Decision pronounced in the open Court on 05.09.2016.

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